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Introduction

Netflix aspires to be the world’s leading Internet video service provider. Its network strategy is two-pronged: use Amazon Web Services cloud infrastructure for data processing, storage, and applications hosting, functioning as the network’s control plane. Then, Netflix uses its “Open Connect” CDN at the edge.

Highlights

  • Netflix is the world’s most widely used provider of Internet-delivered subscription video-on-demand (SVoD) services, which it has offered in its core US market since 2007.
  • Over the last several quarters, Netflix’s annualized net profit margin (net income/revenues for last 12 months) has improved steadily. It is losing less money in Europe than before, and domestic streaming margins continue to improve with scale. However, free cash flow is up and down.
  • Netflix uses Amazon Web Services (AWS) as its primary supplier of cloud infrastructure. At the edge, Netflix relies on its Open Connect Initiative (OCI), under which Netflix partners with hundreds of access providers to localize traffic through deployments of Netflix’s CDN appliance. Netflix also offers to OCI partners open peering at its interconnection points. Netflix estimates that the traffic offload enabled by OCI is over 33% (downstream).

Features and Benefits

  • Assesses Netflix's network strategy and potential evolution.
  • Explains Netflix's efforts in open source, including the Open Source Software Center.
  • Identifies current Netflix suppliers and explains the company's procurement process.
  • Discusses the "starts per second" metric as a central indicator of network health.

Key questions answered

  • What is Netflix's current financial position?
  • What is Netflix's basic approach to technology and innovation?
  • What specific network architecture has Netflix adopted to manage all of its user traffic?
  • What vendors does Netflix work with?
  • How does Netflix develop new technology? What products and software has it designed internally?

Table of contents

Summary

  • In brief
  • Ovum view
  • Recommendations

Evaluation

  • Introduction
  • Business model and financials
  • Technology
  • Networks
  • Evolution

Appendix

  • Network and Technology Profile methodology
  • Further reading
  • Author

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